How we work out the GDP adjustment in your PAYG instalment amount

This article explains the gross domestic product (GDP) adjustment we use to work out your pay as you go (PAYG) instalment amount for the 2012-13 income year.

What is the GDP adjustment?

Your PAYG instalment amounts should reflect your expected tax liability for the current income year as accurately as possible. We adjust your PAYG instalment amount to reflect expected changes in the economy. This adjustment is called the GDP adjustment.

If your PAYG instalment amount was based solely on your previous tax situation without being adjusted, it may not cover your actual tax liability. In this situation, you would make an extra payment when you lodge your annual income tax return.

The GDP adjustment is worked out using information from earlier years. This means it may not match current economic conditions. When economic growth slows, the GDP adjustment may seem relatively high, while in conditions of sudden economic growth, the GDP adjustment may seem relatively low.